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Wednesday Sep 22, 2021   
ERCOT’s grid balancing has taken on a whole new meaning since the February 2021 winter event that saw both power plants and natural gas operators scramble to try and keep the lights on and/or the molecules flowing to neighborhoods and cities as heating demand was a necessity given the extreme cold temperatures that moved through the Lone Star State. Figure 1 | Texas Winter Event – February 2021 The event changed the course of the market that is still felt today as the ERCOT real-time settle has moved away from sending a price signal that skyrocketed to the cap on a given hour when operating reserves were in question or low enough to cross over the threshold that would warrant the Operating Reserve Demand Curve (ORDC) to kick in.  We have written extensively in previous ... » read more
Tuesday Sep 21, 2021   
The single biggest concern for the natural gas industry over the past year has been the lack of production response in the wake of the COVID epidemic. When Gulf natural gas and crude prices crashed during the spring of 2020 it put in motion austerity measures across the entire production community in the Lower 48 as questions arose due to the viability of a demand recovery. The cuts in capital programs put a halt to crude and natural gas drilling. Production volumes stagnated for over a year especially in West Texas and the Permian Basin. But as demand started to recover with the economy production lagged. The result was an imbalance where demand had outstripped the production capability. The result is a underperforming storage condition prior to the start of this winter's ... » read more
Monday Sep 20, 2021   
As the weather pattern rolls from the summer heat to the coolness tied to the fall season, the transition of such will deliver a power demand profile that incorporates more heating demand via electric heating systems that have been installed in almost every urban development projects across the country.  Such an uptick usually changes the hourly profile from that of escalating afternoon to evening ramp demand to that of a double hump image where the morning and evening ramp are more pronounced compared to the middle of the day. Figure 1 | CAISO Hourly Load Profile The top graph in Figure 1 is an illustration of the CAISO hourly load profile for the past ten days and the forecast for the next week or so.  The middle pane represents that of PGAE while the bottom pane illustrates ... » read more
Friday Sep 17, 2021   
By Tim Belden September 17, 2021 I was listening to the NPR show “All Things Considered” on Wednesday (9/15/21) when the lead story about “the grid” came on. The show had some interesting nuggets. It also reminded me that the electricity grid is a big punching bag for pundits to hit. How often have you heard stories about the “fraying grid” or our “aging electricity infrastructure”? I’m not an expert in electricity transmission. It’s some pretty complicated stuff. And I’m not saying that there are not any issues with the grid. There surely are. But what I am saying is that, more often than not, when I hear about issues with the grid in the mainstream media, they rarely present an accurate or balanced story. On ... » read more
Thursday Sep 16, 2021   
European and Asian forward market prices just keep marching higher.  EU storage inventories simply have not been able to muster much momentum rebuilding this summer.  The EU injection season started with inventories at a hefty deficit to normal levels following a cold winter; summer gas demand in both Europe and Asia was strong due to excessive heat driving cooling loads; and supply issues have plagued European and Russian production.  Though recent news has indicated some supply relief may be arrive this winter with the startup of Nord Stream 2 pipeline, there is significant doubt as to when those supplies will become available to the market and growing expectations they may come too late.  As winter forwards have surged, several European countries have begun adopting ... » read more
Wednesday Sep 15, 2021   
As everyone has one eye on the Gulf of Mexico storms, the power supply stack outage storm is ready to hit the market as we cross over from the first half of September to the back half.  Such a storm has been around for years where it comes and goes in both the spring and fall portions of the calendar year and covers pretty much most of the Lower 48. Figure 1 | Lower 48 Nuclear Outages – Year on Year Comparison The graph above illustrates the megawatt volume tied to the Lower 48 nuclear fleet that has units offline each and every day.  The dark black line represents the current year while the other colored lines are tied to the five previous years with the data set tied to equivalent units.  Stated another way, if a nuclear unit has been retired and is not represented ... » read more
Tuesday Sep 14, 2021   
Tropical Storm Nicolas  developed very quickly in the Bay of Campeche this weekend. Once the storm was organized the path turned directly north towards the Texas Gulf Coast. The original National Hurricane Center (NHC) track had TS Nicholas running over Corpus Christi through Austin and into the Midcon. But each model run after the storm developed turned the track eastward and now the feature is running right along the Texas Gulf Coast following the curve of the landscape towards New Orleans. Even though this is still just a tropical storm, the location presents a big threat to the natural gas industry. In the path is the coastal natural gas infrastructure that runs east from Matagorda Bay to the Houston Shipchannel, Beaumont, Lake Charles ... » read more
Monday Sep 13, 2021   
The renewable space continues to get the headlines as the push for a carbon free environment starts at the federal level given that global warming is front and center on everyone mind after a summer that has been filled with fires and heat domes across part of the country that are not usually in the conversation.  The state level is not standing down either as many are in the process of passing bills tied to the carbon initiative which in turn stimulate renewable growth/mandates that will accomplish what is in front of us.  California is of course the front-runner when it comes to the push tied to both a renewable mandate and a carbon initiave as both are in play at this time.  Now each is not issues but one has to appreciate how California keeps forging ahead despite ... » read more
Friday Sep 10, 2021   
This past week has seen another miniature heat wave in much of the Western US. While it’s miniature in the sense that temperatures aren’t soaring to record-breaking highs as they did earlier in the summer, it’s having an outsized impact on the CAISO grid and prices due to a number of intersecting factors. Yesterday we wrote about SoCal Citygate gas and the strain that the El Paso pipeline explosion in Arizona during the middle of August has placed on the regional gas system. As the blog mentions, under mild weather conditions this wouldn’t be an issue as the constraint from the rupture is relatively small. However, Wednesday and Thursday this week saw demand in excess of 40 GW in the CAISO as a result of the regional heat. Still, loads over 40 GW aren’t ... » read more
Thursday Sep 9, 2021   
It has been nearly six years since the Aliso Canyon storage cavern rupture just North of Los Angeles but since that moment SoCal Gas continues to see impairments of all kinds that threaten the utility's ability to manage the franchise demand. Although the rupture of Aliso Canyon has been largely rectified with the cavern receiving a clean bill of health back in 2019, the restrictions on the cavern withdrawals remain in place. This is just the tip of the iceberg. Since that moment in 2015 there have been a series of outages, some planned and some forced that have cut the ability to receive gas from interstate pipelines that connect to California. The latest is the El Paso Pipeline rupture/explosion outside of Coolidge Arizona on August 15th.  Figure 1 | ElPaso Pipeline Map from Kinder ... » read more
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